SEC Accused of Making Misleading Statements About Exchange Assets by Binance, Binance.US and CZ

Binance, Binance.US, and CZ File Motion Claiming SEC Misled Public

Lawyers acting on behalf of Binance.US, Binance Holdings Limited, and CEO Changpeng “CZ” Zhao of Binance have submitted a motion claiming that the U.S. Securities and Exchange Commission (SEC) misled the public in statements they made related to a current securities lawsuit.

In a June 21 filing to the U.S. District Court for the District of Columbia, the legal teams for Binance, Binance.US, and CZ contended that the SEC had issued “misleading” statements in a June 17 press release and requested that the financial regulator abide by the “applicable rules of conduct.” The filing referred to SEC Enforcement Director Gurbir Grewal’s statement that CZ and Binance could “mix customer funds or divert customer funds as they wish” as well as an order requiring all parties involved in the lawsuit to return to the United States.

“The SEC has no proof that the assets of BAM [Binance.US] customers have been dissipated, combined improperly, or misused in any way,” the June 21 filing declared. Additionally, the SEC’s press release appears to be crafted to create unnecessary confusion in the market, which could have the effect of damaging BAM customers instead of protecting them. Furthermore, it risks tainting the jury pool with inaccurate depictions of the evidence regarding the Defendants.”

If a federal judge approves it, this order could stop the SEC from making public statements about the Binance lawsuit that could change the course of the case. During a June 13 hearing, the Binance legal team presented part of a transcript in which the SEC’s attorney admitted there was no proof that funds from Binance.US were being transferred abroad.

Binance.US has refuted the SEC’s motion to freeze funds, asserting that “all of the SEC’s claims fail”.

SEC’s Legal Action Against Binance, Binance.US and CZ Ongoing

The SEC’s legal action against Binance, Binance.US and CZ, initiated on June 5, is still ongoing. It claims that they have conducted unregistered securities sales and Binance has not registered as a stock exchange or a broker-dealer clearing house. SEC Chair Gary Gensler declared that CZ and Binance had misled investors concerning their risk management procedures and the regulator is looking for restitution and other punishments.

The SEC submitted a motion aiming to get the court to freeze all Binance.US assets, but eventually came to a compromise in which only the exchange’s personnel would be allowed to access customer funds while the legal action was in progress. In the middle of the U.S. legal proceedings, Binance declared the launch of a regulated cryptocurrency platform in Kazakhstan.

Magazine: Recover Your Funds: The Unusual Realm of Cryptocurrency Litigation.